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Genoptix Agrees to $470M Takeover by Novartis

Genoptix has found itself a buyer after spending more than a month on the auction block. The Carlsbad, CA-based company, which runs a centralized lab to test help doctors manage blood cancer patients, has agreed to be acquired by Switzerland-based pharmaceutical giant Novartis for $470 million.

Carlsbad, CA-based Genoptix (NASDAQ: GXDX) said it has agreed to be acquired for $25 a share. The price represents a 39 percent premium over $17.98 a share—the last closing price on December 13, before news broke that Genoptix had hired Barclays to help seek out buyers of the company. The deal is structured as a tender offer, meaning that a majority of shareholders will have to hand over their stakes to Novartis at the agreed upon price to seal the deal. It is expected to close in the first half of 2011, Genoptix said.

The deal makes sense for Novartis on a couple levels. Genoptix helps blood cancer specialists known as hematologists/oncologists with a comprehensive diagnostic report they can use to help prescribe certain medicines. Novartis has a big stake in this field, particularly with with its blockbuster treatment imatinib (Gleevec) for chronic myeloid leukemia. Novartis is the world’s second-biggest maker of cancer drugs, with $9 billion in 2009 sales—about one-fifth of the company’s total $44.2 billion in revenue that year. Genoptix is also profitable, so it should quickly start adding to the Novartis bottom line.

“We believe this transaction provides substantial value and liquidity to our stockholders,” said Genoptix CEO Tina Nova, in a statement. “We are excited about becoming part of the Novartis Molecular Diagnostics unit and continuing to enhance the value that we bring to our core community oncologist customers. We share Novartis’ strong commitment to transforming patient care, improving health outcomes for patients and enhancing the suite of diagnostic tools for our physician customers.”

Genoptix has said it expects to generate $192 million to $195 million in revenue for 2010. That basically represents a plateau after years of rapid growth. If Genoptix hits the high end of that revenue forecast, it will see a 6 percent increase in annual sales. The previous year, it saw 59 percent growth in annual sales, and the year before that, sales climbed 96 percent.

Genoptix, founded in 1999, has 500 employees, Novartis said in a statement. It didn’t say how many employees will be retained once the acquisition goes through, but did say they will work to “support and expedite the development of companion diagnostic programs, especially in oncology.”